Top hints and tips for auto enrolment and workplace pensions
Workplace pensions and auto enrolment is currently one of the top items on our list of things to consider with our clients.
Auto enrolment affects ALL businesses with staff and those that have a payroll scheme. It can also affect non-businesses that employ staff. It even affects one man or one woman companies. The latter can claim exemption, but until that exemption is claimed they are fully within the rules …… and the resultant penalties for failing to act. We can claim that exemption for you.
It is true that there is a lot to consider. We can help and provide a cost effective, all inclusive, turn-key solution for micro businesses for £500. This includes a fully set-up and compliant workplace pension scheme, with a leading provider, with all required details and data, including your staff’s particulars entered, ready to start using from your staging date.
Here are some of the top matters to consider which you may have time to reflect on over the Christmas break. Here is our top 10 list.
1. Failing to plan is planning to fail. Don’t bury your head in the sand. Auto enrolment will not go away. The penalties for non-compliance can be very high.
2. Do not try and use methods to persuade employees not to be interested in a pension! E.g. offering a one off bonus, a drink down the pub or a back hander. It will come back to haunt you. None of this is going away, people are simply not saving enough for retirement and we are all living longer.
3. Make sure the details the Pensions Regulator has for you are correct, it is your responsibility and there are no excuses.
4. Find out your staging date, and do not be late in staging. You will incur a one-off penalty and then daily fines.
5. Check your workforce’s status. It is not just employees that you have to consider but possibly the self-employed, contractors and agency workers who provide their personal services. Remember, you usually find out that someone isn’t self-employed when you try to end that relationship.
6. Identify your employee’s eligibility. It is based on their age and their earnings. Eligibility can change at each and every pay date e.g. through an earnings spike, through a bonus or simply getting another year older!
7. Familiarise yourself with jobholder definitions:
Eligible jobholder: They must be automatically enrolled into auto enrolment scheme and both employer and employee must contribute.
Non-eligible jobholder: Employers must provide their employee with information about their auto enrolment scheme, and if the employee chooses to opt in both the employer and employee must then contribute.
Entitled worker: Employers have to write to employees to inform them of their pension scheme. If employees choose to join then the employer does not have to contribute.
8. At each stage communication is important. A personal written letter or email is required and an employer must keep a record of this. This is vital, as an employer will rely on this documentation as evidence if an employee says they knew nothing about a pension scheme and were never offered one.
9. Statements of the main terms of employment need to include the pension details. Policies need to include the subject of pensions, rollout and communication process, including opt-out procedures.
10. You may wish to consider waiting (‘postponing’) when your employees are eligible to join e.g. following completion of a three month probationary period before enrolling them into the workplace pension scheme. If this is the case this needs to be written into any probationary period agreement. No matter what the length of the probation period is, all workers must be assessed and, if applicable, auto-enrolled after three months.
For a more detailed review of auto enrolment and workplace pensions, take a look at our auto-enrolment website at http://www.all-paul.co.uk/auto-enrolment.